Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Nestlé Investor Seminar
2014
Paul Grimwood
Chairman & CEO Nestlé USA June 3rd & 4th, Liberty Hotel, Boston, USA
Nestlé in the USA
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston 1
Disclaimer
This presentation contains forward looking statements
which reflect Management’s current views and estimates.
The forward looking statements involve certain risks and
uncertainties that could cause actual results to differ
materially from those contained in the forward looking
statements. Potential risks and uncertainties include such
factors as general economic conditions, foreign exchange
fluctuations, competitive product and pricing pressures and
regulatory developments.
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Nestlé is a fully scaled operation in the USA
2
179 Locations
87 Factories
47 States
51,000 Direct
Employees
5 Main Distribution
Centers
9 R&D Centers Solon
Oakland
Glendale
Tampa
New York
Florham Park
Stamford
St. Louis
(not exhaustive)
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston 3
We operate in growth categories with leading brands Category
Size 2013
Category
$ CAGR (’11-’13)
Nestlé
Market Share
Petcare $25.7bn +4.6% 33%
Confections $19.3bn +4.5% 6%
Frozen Food $15.9bn -1.8% 33%
Waters $9.4bn +3.8% 38%
Ice Cream $9.2bn +1.4% 25%
Nutrition $6.7bn +3.5% 34%
Coffee & Creamers $3.5bn +5.1% 49%
Baking $1.8bn +0.9% 45%
RTD Milk $1.6bn +4.3% 19%
(not exhaustive)
#1
#2
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#2
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#2
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#1
#1
Top-2 supplier
Source: AC Nielsen
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
29.9bn 78 m
4
97%
Nestlé in the USA has the penetration depth…
of US households
consume Nestlé
products
households bought
4 or more Nestlé brands
in the last 52 weeks
Nestlé consumer
units sold each
year in the USA
(1): out of 115 million US households
(1)
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
FAMILY ADULT BABY
… and the breadth to continuously touch consumer lives
5
TEEN PETS HEALTH
NEEDS
BREAKFAST
SNACKING
LUNCH
DINNER
OUT
OF HOME
(not exhaustive)
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston 6
The US economic environment remains subdued
Depressed economy, with
high unemployment and
under-employment (13% combined, Bureau of Labor Statistics)
Private Label gaining share with
the value-conscious consumer (+18.2% $ growth 2009-2013, Nielsen Scantrack)
Low inflation, below the
Fed’s target of 2%
Low consumer confidence (Consumer confidence index 80 March 2014
versus 93 historic average)
GDP growth projected
below 3% for 2014-2015
Declining household income,
squeezing consumer budgets (-8.3% from 2007-2011, Census Bureau)
Middle Class
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
The growth of US Food & Beverage has slowed down
7
Dollar
Units
2011 2012 2013
5%
0.4%
2.3%
0.3%
1.8%
-1.2%
Year-on-Year growth in
food & beverage
Note: figures exclude ice, liquor and vitamins
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Cultural relevance
of products
The Digital
Revolution Mega Consumer
Segments (Boomers, Millennials,
Hispanics)
The rise of the value
conscious consumer
More fluid way of
eating and shopping
Healthy
Lifestyles
“Pure” Foods
Speed-scratch
cooking & flavor
exploration
Consumer trends pose challenges and opportunities
8
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Nestlé in the USA has the strengths to win S
tren
gth
s
Op
po
rtun
ities
9
Multi-category execution power
Leading global resources
and capabilities
Strong brands
Category expertise, leveraging
diverse portfolio
Leverage matrix organization
Focus I&R and drive
portfolio management
Capitalize on leading NHW
and sustainability credentials
Optimize cost-to-serve
as ONE Nestlé
Reignite the growth of Frozen Culture of continuous excellence
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
We are driving our performance…
10
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
…with a robust strategic plan to win in the USA
11
Disciplined portfolio management
Invest in strategic growth drivers
Fix or divest underperformers
Make choices
Nutrition, Health & Wellness
Bigger, Better, Bolder Innovation
New channels & integrated P2P*
Remove waste to reinvest
Operate as ONE Nestlé in NA
Master complexity
Grasp opportunities
Value what consumers value
Embody Nestlé in Society
Create Shared Value
Strengthen Nestlé brand equity
Reflect our consumer diversity
Best-in-class new capabilities
Accelerate career development
Best-in-class Digital capabilities
Step up on Digital Media
Leverage e-commerce
Embrace digital
Have the best people
Engage with the community and stakeholders
* integrated path-to-purchase
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
” Delivering outstanding
product quality & NHW
Communicating nutritional
competitive advantage
Leading the industry’s
NHW agenda
Grasping opportunities: Nutrition, Health & Wellness
12
Leading the sodium reduction efforts
Founding sponsor of the AAP Institute for Healthy Childhood Weight
Obesity solutions roundtable
Combating obesity in children
10% reduction
by 2016
100% PHO* free
by end 2016
100% of products with portion guidance by 2015
“ The No. 1 global consumer concern after the economy is HEALTH
Commitment to 60/40+ testing
* Partially Hydrogenated Oil
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Grasping opportunities: Bigger, Better, Bolder Innovation
13
“attain and
maintain good
health”
“adventure
and
discovery”
“snackification”
“pure, fresh,
natural,
simple”
“choosing socially
responsible products”
* NUSA example
of total 2013 sales originated from products
innovated or renovated in the prior 36 months* 26%
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Designing commercial plans that reflect an integrated
path-to-purchase
Driving joint business
planning with key retailers
Addressing alternative
channel opportunities
Grasping opportunities: Winning with Retailers
14
Near Purchase
In Store
Near Store
Out of Store
At Product
Create awareness
and desire
Connect
Engage
Persuade
Close the sale
Partner with key
customers to enable
strategic initiatives
Leverage scale and
outstanding category
management
* 3 year CAGR (2010-2013)
Nestlé growth in
the Dollar channel* +16%
+8% Nestlé growth in
the Club channel*
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Valuing what consumers value
Streamlining the
cost structure
Operating as
ONE Nestlé
Mastering
complexity
+6% INVESTMENT
IN MEDIA AND
TRADE IN 2013
-37% SKU count
2013 vs. 2012
Driving the “Virtuous Circle” (NUSA example)
-110 bps*
2013 vs. 2012
15 * Includes Overheads, Total Delivered Cost and Media Buy
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Marketing
Optimization
Valuing what consumers value
16
Project “Invest” (NUSA examples)
Matrix organization structure to drive synergies
Solon as the Frozen Food Center of Excellence
ONE Face to the Customer
DSD optimization, ONE Supply Chain
Factory efficiency and footprint optimization
Leveraging N.A. aggregated scale in Procurement
Consolidated media buy in North America
Marketing investment optimization
Research and digital content optimization
Organizational
Structure
Total Delivered
Cost
-110 bps*
2013 vs. 2012
Streamlining the
cost structure
* Includes Overheads, Total Delivered Cost and Media Buy
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Making choices through portfolio management
17
Investing selectively (Marketing Expenses(1) 2013 vs. 2012)
Allocating Capital effectively (Invested Capital 2013 vs. 2012)
Improving Margins Reshaping the Portfolio
+170 bps
Example:
Ice Cream + Pizza
-26% +13%
Accelerate (NUSA) Fix
(NUSA)
-12% +4%
Accelerate (NUSA) Fix &
Defend (NUSA)
Mark
et
attra
ctiveness (
gro
wth
)
DEVELOP ACCELERATE
FIX DEFEND
Ability to Win (RoR*)
* Return on Resources
(1): consumer-facing marketing expenses
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Embracing digital
18
Building best-in-class
digital capabilities
Leveraging online
business models
of US pet adoptions
are with Petfinder
Users of Nestlé
Waters e-service
Engaging with
consumers digitally
500,000 followers
>47M friends
113M views (2014 YTD)
Best-in-class
Digital
Acceleration
Team
Insights
Center in
Solon, OH
Incubator
group in
San Francisco 25% spend on
digital media(1)
50 %
600k
of Nespresso sales
through the Internet
60 %
Nestlé branded
trucks
(1) % of NUSA‘s Media spend
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Having the best people
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Reflecting our
consumer diversity
Building best-in-class
new capabilities
Accelerating career
development
Broadening
roles
Multi-
cultural
Nutrition,
Health &
Wellness
Digital
Insights
Communi-
cations
Int’l and
domestic
exposure
Flat
structures
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
Engaging with the community & stakeholders
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First US report coming this
summer, increasing
transparency and awareness
Strengthening
investments
NHW positioning
Enhancing the equity of
the Nestlé parent brand
Communicating the
CSV agenda
Embodying Nestlé
in Society
New Corporate Affairs Team
in DC, representing Nestlé SA
Focus on NHW and CSV
Engaging 350+ organizations
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
A robust strategic plan is in place to win in the USA
21
Disciplined portfolio management
Invest in strategic growth drivers
Fix or divest underperformers
Make choices
Nutrition, Health & Wellness
Bigger, Better, Bolder Innovation
New channels & integrated P2P*
Remove waste to reinvest
Operate as ONE Nestlé in NA
Master complexity
Grasp opportunities
Value what consumers value
Embody Nestlé in Society
Create Shared Value
Strengthen Nestlé brand equity
Reflect our consumer diversity
Best-in-class new capabilities
Accelerate career development
Best-in-class Digital capabilities
Step up on Digital Media
Leverage e-commerce
Embrace digital
Have the best people
Engage with the community and stakeholders
* integrated path-to-purchase
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston
2011 2012 2013
22
The strategy is delivering resilient financial results
Organic Growth
+2.5%
2011 2012 2013
Trading Operating Profit (in USD)
Yearly Average +3% CAGR (1)
(1): 2010 to 2013 change
Nestlé Investor Seminar 2014 June 3rd & 4th, Boston 23
In summary…
Uniquely positioned in growth categories,
with a portfolio of leading brands
A robust strategic plan to win in the new reality
Disciplined portfolio management and
resource allocation
World-class capabilities to drive innovation
and fuel growth
A passionate, experienced leadership team
Driving growth and enhancing margins & ROIC